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Restaurant Brands International Inc. (QSR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue beat consensus: $2.410B vs $2.337B consensus (+3.1%), while Adjusted EPS of $0.94 was modestly below the $0.968 consensus; organic AOI grew 5.7% YoY, with consolidated comps +2.4% and system-wide sales +5.3% .*
  • GAAP income from operations fell 27.2% YoY, driven by a large “other operating expenses (income), net” of $149M vs $7M last year; non-GAAP AOI and Adjusted EBITDA rose to $668M and $762M respectively .
  • Guidance largely maintained: Segment G&A (ex-RH) $600–$620M, RH Segment G&A ~$100M, Capex & Cash Inducements $400–$450M; Adjusted net interest expense refined to “around” $520M; Q3 dividend declared at $0.62; $1B repurchase authorization effective Sept 15, 2025 .
  • Stock narrative catalysts: Tim Hortons’ 17th consecutive Canada comp increase (+3.6%), strong International growth (+9.8% system-wide sales), BK U.S. outperformance on comps (+1.5%), accelerating Carrols refranchising and BK remodels; BK China comps turned positive, improving unit economics .

What Went Well and What Went Wrong

  • What Went Well

    • Tim Hortons momentum: Canada comps +3.6% and sustained beverage growth; CEO: “we remain confident in our ability to deliver 8%+ organic adjusted operating income growth in 2025” .
    • International engine: system-wide sales +9.8%, comps +4.2%; strong markets include UK, Spain, Australia, Germany; BK China comps turned positive, ahead of expectations .
    • BK U.S. operational and brand execution: comps +1.5%, remodels producing mid-teens sales uplifts, Carrols restaurants outperforming the system; Executive Chair: “there is a moment where everything starts to click and the tide turns” .

  • What Went Wrong

    • GAAP compression: income from operations down 27.2% YoY, impacted by $149M “other operating expenses (income), net”; net income from continuing ops down 34% YoY .
    • Bad debt and BK China discontinuity: $9M bad debt in Q2 (vs net recovery last year) and a $10M YoY revenue/AOI headwind from classifying BK China as discontinued operations; FY headwinds expected at $37M revenue/$19M AOI .
    • Popeyes U.S. softness: comps −0.9% despite product activation; cost headwinds from beef inflation (high-teens YoY) weigh on BK U.S. commodities; CFO expects BK Carrols H2 restaurant-level margin to compress ~100 bps YoY .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenues ($USD Billions)$2.296 $2.109 $2.410
Income from Operations ($USD Millions)$635 $435 $483
Net Income from Continuing Ops ($USD Millions)$361 (total net) $223 $264
Adjusted EBITDA ($USD Millions)$688 $642 $762
Adjusted Diluted EPS ($USD)$0.81 $0.75 $0.94
Diluted EPS – Continuing Ops ($USD)n/a$0.49 $0.58

Estimates versus actual (S&P Global):

MetricConsensus (Q2 2025)Actual (Q2 2025)Surprise
Revenue ($USD Billions)$2.338*$2.410 +$0.072 (+3.1%)*
Primary EPS ($USD)$0.968*$0.94 −$0.028 (−2.9%)*
EBITDA ($USD Billions)$0.769*$0.722*−$0.047 (−6.1%)*

Values retrieved from S&P Global.*

Segment results (Q2 2025 vs Q2 2024):

SegmentTotal Revenues Q2’25 ($MM)Total Revenues Q2’24 ($MM)AOI Q2’25 ($MM)AOI Q2’24 ($MM)
Tim Hortons (TH)$1,083 $1,031 $278 $269
Burger King (BK)$388 $364 $121 $114
Popeyes (PLK)$210 $194 $66 $62
Firehouse Subs (FHS)$59 $53 $15 $13
International (INTL)$250 $232 $172 $160
Restaurant Holdings (RH)$469 $230 $16 $14

Consolidated KPIs:

KPIQ2 2025Q2 2024
System-wide Sales ($MM)$11,853 $11,252
System-wide Sales Growth (%)5.3% 5.0%
Comparable Sales (%)2.4% 1.9%
Net Restaurant Growth (%)2.9% 4.0%
System Restaurant Count32,229 31,324

Brand KPIs (selected):

BrandComp Sales Q2’25System-wide Sales Growth Q2’25Notes
TH Canada+3.6% TH total +3.9% Supply chain sales +$50M YoY excl. FX
BK U.S.+1.5% BK total +1.0% Ad fund rate step-up drove BK revenues
INTL – BK+4.1% INTL total +9.8% BK China revenues absent (held for sale)
PLK U.S.−0.9% PLK total +1.6% Company restaurant sales up post-acquisition
FHS U.S.−1.1% FHS total +6.3% Development momentum; ad revenues up

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Segment G&A (excluding RH)FY 2025$600–$620M $600–$620M Maintained
RH Segment G&AFY 2025~$100M ~$100M Maintained
Total Capex & Cash InducementsFY 2025$400–$450M $400–$450M Maintained
Adjusted Interest Expense, netFY 2025$500–$520M ~$520M Raised to upper end
Dividend per shareQ3 2025$0.62 (Q2) $0.62 (Q3) Maintained
Adjusted Effective Tax RateFY 202518–19% 18–19% Maintained
TH Supply Chain Gross MarginFY 2025~19% (implied in model) ~19%; Q4 seasonal low Maintained/detail added
BK Carrols Restaurant-level MarginH2 2025n/a~100 bps YoY compression from ~12.3% FY24 New item
Net Restaurant GrowthFY 2025~±3% ~3% Maintained
Organic AOI GrowthFY 20258%+ 8%+ Maintained
Share Repurchase Authorization9/15/25–9/30/27Prior $1B through 9/30/25 New $1B authorization replacing prior Extended/renewed

Earnings Call Themes & Trends

TopicQ4 2024 (prev)Q1 2025 (prev)Q2 2025 (current)Trend
AI/TechnologyLimited disclosure in PR n/a“We are very focused on what can happen with AI… improve customer experience and operations” – Executive Chair Increasing focus
Supply Chain/CommoditiesGeneral update; FY24 AOI growth TH supply chain GM ~19% for 2025 Beef high-teens YoY; BK U.S. basket mid-single digit; coffee normalization expected mid/late 2026 Cost pressure easing (coffee), beef still elevated
Tariffs/MacroForward-looking caution Tariffs potential ~100 bps or less COGS if localized Maintained view; monitoring Managed impact
BK U.S. Value/RemodelsRoyal Reset funded; uplifts mid-teens Stable value ($5 duos/$7 trios); remodel plan to reach ~85% modern image by 2028 Continuing remodels (~400 in 2025), value barbell; Carrols outperformance Execution improving
InternationalStrong growth (BK INTL +9.6% in Q4) Comps +2.6%; diversified growth engines System-wide sales +9.8%; BK China comps positive, unit economics improving Strengthening
BK ChinaIssue flagged; master franchisee resolution Acquired and classified as held for sale; FY headwinds quantified Positive comps; actively finding new partner with Morgan Stanley Turning the corner
Popeyes U.S.Growth FY24; operations emphasis “Easy-to-love” strategy; step-up in ad spend; kitchen upgrades rollout Sequential comps improvement; wraps/$3.99 activation, ops upgrades continue Gradual improvement

Management Commentary

  • CEO: “We remain confident in our ability to deliver 8%+ organic adjusted operating income growth in 2025.”
  • CFO (modeling): “Adjusted EPS increased to $0.94… we now expect adjusted net interest expense to be around $520M,” with beef up high-teens YoY and BK U.S. commodity basket mid-single digit; BK Carrols H2 margins to compress ~100 bps YoY; adjusted tax rate 18–19% .
  • Executive Chair: “We are very focused on what can happen with AI… excited about how it’s going to affect our operations, our franchisees, our profitability, the customer experience.”
  • CEO on BK China: “Comparable sales turned positive in the second quarter and unit economics improved meaningfully quarter over quarter… actively working with Morgan Stanley to identify [a] partner.”

Q&A Highlights

  • Carrols outperforming BK U.S. system; refranchising ahead of schedule with internal Crown Your Career candidates signed; intent to place restaurants with “excellent local operators” .
  • BK U.S. value architecture stable; no July impact from competitor wraps; price increases running low-single digits; continued balance of premium, family, and value .
  • International momentum broad-based; improvements in France; APAC strength (Japan, Australia); BK China positive comps faster than expected .
  • Remodel pace: ~400 BK U.S. remodels in 2025; “Sizzle” image uplifts even better than mid-teens on early dataset; target 85% modern image by end of 2028 .
  • Popeyes U.S.: operations and kitchen modernization; advertising step-up; sequential comp improvement with flavor-forward promotions and wraps .

Estimates Context

  • Revenue beat (+3.1%) and EPS slight miss (−2.9%) vs S&P Global consensus for Q2 2025; EBITDA below consensus (definition differences vs company “Adjusted EBITDA”) .*
  • Given International strength and TH Canada momentum, revenue estimates may drift higher; EBITDA/ EPS estimates likely modestly revised for commodity headwinds and BK China discontinued operations effect quantified by CFO ($37M revenue, $19M AOI FY impact) .*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Top-line momentum returned: consolidated revenue beat, driven by TH supply chain and International royalties; watch for International resilience and TH beverage expansion through summer .
  • EPS dynamics: slight EPS miss despite AOI/Adj. EBITDA growth; GAAP pressured by $149M “other operating expenses” and bad debt; non-GAAP trajectory intact (organic AOI +5.7%) .
  • BK U.S. execution improving: comps +1.5%, remodels with mid-teens uplifts, refranchising ahead of plan—monitor Q3/Q4 comp trajectory and remodel cadence as share gains compound .
  • BK China is turning: positive comps, improving unit economics, partner search underway—discontinued accounting creates near-term headwind but de-risks long-term franchisor model .
  • Commodities mixed: beef inflation elevated; coffee easing with benefits expected mid/late 2026—margin outlook cautious H2’25 at BK Carrols, but strategic cost discipline and ad fund mechanics provide offsets .
  • Capital return and balance sheet: $0.62 Q3 dividend maintained; new $1B repurchase authorization starting 9/15/25; net leverage at 4.6x with focus on deleveraging over time .
  • Trading lens: Near-term upside biased to revenue/International strength and BK U.S. execution; risks include commodity inflation and GAAP volatility from non-operating items; catalysts include share repurchases commencement, BK remodel milestones, and any BK China partner announcement .